Hospital takes first steps toward fiscal health

STOCKTON - It was a significant week at San Joaquin General Hospital last week, with county officials giving the nod to a new permanent governing board and hospital staff recommending to essentially scale down by not replacing the hospital's seismically unsound Old Tower.

STOCKTON - It was a significant week at San Joaquin General Hospital last week, with county officials giving the nod to a new permanent governing board and hospital staff recommending to essentially scale down by not replacing the hospital's seismically unsound Old Tower.

Officials say both developments are changes that could help achieve long-sought financial stability, or at least put the hospital in a better position to adapt to the changing health-care environment.

A vote by the San Joaquin County Board of Supervisors could have the new board in place by the end of March.

And as that board builds on recent changes under way, the future direction of the hospital will emerge, Supervisor Steve Bestolarides said. "What is the hospital going to look like next year? And in three years? And in five years?"

It could do that by developing a new business model for the hospital, he said. And along the way, the board will recruit a management team and establish a foundation to financially help the hospital, among other things, he said.

The hospital panel would have certain authority, but would essentially be an advisory body to the Board of Supervisors.

County government is responsible for providing medical care from the poor. It does so through San Joaquin General, though indigent care is not the only function of the hospital, which has an annual budget of about $220 million.

Mounting losses at the hospital over the past decade have had county officials concerned about the impact on other parts of the county budget, which pays for a wide range of other government services. This concern has resulted in multiple studies and attempts at change over the years.

In 2010, the board directed a series of changes, including the creation of an Interim Board of Trustees, which put together the plan for its permanent replacement.

On Wednesday, the interim board stopped short of endorsing a staff recommendation to not replace the Old Tower, built in 1932. Because it does not meet state earthquake standards, the tower must be vacated by 2020. It would take an estimated $60 million to $120 million to replace the building, which is money the hospital doesn't have, staff said. The interim board wanted more information about other options and other impacts of not using the tower.

Without the Old Tower, San Joaquin General would be a smaller hospital. There are 109 beds in the newer building, and the Old Tower has 35 active beds and 22 that are not in use.

When the interim board looked at the issue, it discussed the possible downside to the downsized model.

"Sometimes it's counter-intuitive," said Health Care Services Director Ken Cohen, who is a member of the interim hospital board. "Sometimes the downsize model can become more expensive if you lose the capacity," he said, adding the lost capacity also affects the hospital's teaching program.

A 2009 report commissioned by the county projected costs to the county to cover losses under different scenarios. Though money was saved on capital costs, the option to not replace the Old Tower was projected to cost as much as $34 million a year, which was the most expensive of all the options in the report.

However, the environment has changed, and county officials note some underpinning facts behind the old analysis might have changed.

There would be challenges, since there would be fewer patients sharing the overall operating costs. But smaller operations could be more efficient, too, hospital CEO David Culberson said. And the hospital also has put a bigger emphasis on outpatient and primary care, which means more patients being treated before some illnesses become serious enough to require hospitalization, he said.

There's an industrywide trend showing a decreased demand for in-patient bed space, he said. "We, as an industry, have seen length of stays reduce tremendously over the past 10 years."

Other developing plans at the hospital are being realized this year.

It became the county's second certified stroke center earlier this month. It is working toward becoming the county's first designated trauma center, a step medical officials said would work with a countywide plan to increase the chances of survival for victims of trauma.

S.J. General is the only hospital in the running, and Friday it checked off the next box toward that end by submitting its proposal to county Emergency Medical Services.